Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 88

Understanding income statement relationships—Apple Inc. Selected data from  the September 27, 2008, and September 29, 2007, consolidated balance sheets and income statements for the years then ended for Apple Inc. follow. All amounts are reported in millions.

	2008	2007
Net Sales	$32,479	$24,006
Cost of sales	21,334	15,852
Research and development expenses	1,109	782
Selling, general, and administrative expenses	3,761	2,963
Operating income	?	?
Other income, net	?	599
Provision for income taxes	2,061	?
Net income	$4,834	$3,496

Required:

a. Calculate the amount of Apple’s gross profit for each year. Has gross profit as a percentage of sales changed significantly during the past year?

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b. Calculate the amount of Apple’s operating income for each year. Has operating income as a percentage of sales changed significantly during the past year?

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c. After completing parts a and b, calculate the other missing amounts for each year.

Case

Step 1 of 4

Understanding income statement relationships–case Apple Inc.:

Income statement: It refers to a financial statement that facilitates the net income/profit results by summarization of the company’s income and expenses during a particular financial period.